Thousands of domestic leaseholders of flats in the UK are subject to a loophole which exposes them unfairly to uncapped commercial gas and electricity rates.

Normal domestic consumers are afforded some protection by the price caps implemented by Ofgem at now 3 monthly intervals as part of the Default Tariff Act. There is no such cap for leasehold customers who are at the mercy of their managing agency's commercial gas and electricity contracts, when a communal heating system delivers heating, hot water or both to a residential leasehold flat as part of the overall estate costs.

Commercial gas rates have risen from 2p to 8p per unit in 2021 and now rising to a potential 30p a unit in October 2022. This represents a 15 fold increase.

This has resulted in an example bill rising from £400 a year to £6000 a year - representing a cost equivalent to many people's overall rent.

These leaseholders are bound by the terms of that lease to pay these rates without discussion or any way of opting out - frequently, due to charges being applied by square footage instead of usage, there is no opportunity to perform any energy saving measures and the costs are chargeable upfront. 

The cost of living crisis impacts us all - but for this small group experiencing a potential triple whammy of ever-escalating uncontrolled energy price rises, the inexorable rise in interest rates, and eye watering increases in leaseholder service charges due to cladding issues this is felt most keenly of all.

We ask the government to urgently review this loophole. Where commercial energy is supplied to an estate and the end customer is domestic, we request that we have the same domestic protections applied to prevent these enormous unfair and unguarded increases being passed on to leaseholders, creating financial hardship in a situation that is outside their control.

We also ask government to compel all building owners operating a heat network to modernise leases to remove the upfront charging by square footage clause and replace it with a metered usage policy where all units pay for what they have used in arrears - allowing leaseholders to take full control of their energy usage.